Thursday, October 12, 2006

Extradition Watch

First, the NatWest 3, waiting for nearly another year for their trial to begin in Houston. Former Enron Chief Financial Officer Andrew Fastow recently had 4 years knocked off his expected 10 year sentence, in view of his actual and anticipated cooperation with civil lawsuits by Enron shareholders against various banks that dealt with Enron. One of those banks is Royal Bank of Scotland, the owner of NatWest for whom the three worked.

So consider the problem now faced by the three. Fastow will doubtless be called as a prosecution witness in their case, because he was the Enron counterpart in the allegedly fraudulent deal that they did. So Fastow is going to claim that the three individuals were part of a scheme to defraud RBS -- and then go into civil court as a plaintiff witness to claim that RBS was one of Enron's "go-to" banks when it wanted a dodgy deal done. So he has to walk a fine line between claiming that RBS was willfully turning a blind eye to tricky deals -- to bolster the case of the civil plaintiffs -- while also claiming that RBS was a victim of turning a blind eye to what its three employees were up to.

This raises a theory regarding one lingering mystery about the NatWest 3 -- why RBS, the victim of their alleged fraud, never pursued a criminal case for it. If RBS had done so, the three likely would have claimed that NatWest RBS management had given them wide latitude in how to deal with Enron -- and the resulting evidence might well have exposed RBS to massive civil liability in the US civil cases.

Hence the dilemma of the three. A severely compromised prosecution witness, with strong incentive to cooperate with the prosecution and a potentially contradictory story in two different courtrooms, and a potential defence witness -- their former bosses -- with every incentive to clam up because of the parallel civil litigation. This is the kind of capriciousness that should have figured in the Clarke-Reid-Blair decision to extradite them.

While we're at it, an update on a case we've blogged about before, that of Ian Norris, aka the Morgan Crucible One. The US extradition request for him is arguably even more egregious than for the three, because it comes close to failing the "dual criminality" principle of extradition cases -- that the alleged crime must have been a crime in both countries when it was committed. Norris is accused of price fixing, which was not a crime in the UK until 2003 (after it occurred), so Al Gonzales' boys simply redefined price fixing as "conspiracy to defraud" and resubmitted the request. So far, the UK government is going along, but Norris has another appeal next week. Interest in the case is apparently growing, as there is some concern that the US stunt would retroactively make other instances of cartel behaviour in the UK into criminal acts.

UPDATE 9 MAY 2007: The latest update on the NatWest 3; trial now in October. Whenever the trial gets going it will be covered intensively here.

No comments: